Premier Mike Baird's price guarantee will save NSW families as little as $9 a year

Sean Nicholls

A key measure announced by Premier Mike Baird to allay fears that power bills would rise under his plan for the $20 billion partial privatisation of the state's electricity network would save the average household as little as $9 a year.

Because the measure would only be in place until 2019 – two-and-a-half years from when the sale is expected to be completed – the total benefit to the average NSW family would be as low as $22.50, on present forecasts.

The proposal to mandate a 1 per cent cut to electricity network price rises was announced by Mr Baird on Tuesday in response to claims by Labor and unions that private ownership of 49 per cent of the electricity "poles and wires" would encourage bills to soar.

But its value has been questioned by a leading energy researcher and the chief executive of the state's peak welfare body, both of whom say it will make little difference to struggling households.

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On Wednesday Mr Baird defended the measure, arguing it "simply provides households with a further, ironclad guarantee that Labor's current claims about prices are nothing but a desperate scare campaign".

He said the key elements that will "maintain downward pressure" would be "continuing regulation by the [Australian Energy Regulator] and private sector efficiencies, which have made network costs for consumers in Victoria and South Australia significantly lower than in NSW".

Under Mr Baird's privatisation proposal, which the Coalition will take to next year's election, the new owners of the electricity networks would be required to discount by 1 per cent any rises allowed by the Australian Energy Regulator.

The discount would benefit electricity retailers that the government believes would be encouraged in a competitive market to pass it onto customers.

But Mark Henley, a member of the consumer challenge panel attached to the Australian Energy Regulator and the energy advocate for UnitingCare Australia, said that given the fluctuation in the consumer price index, a 1 per cent discount "isn't going to make much difference".

Mr Henley suggested a 5 per cent discount might have some impact and there was "plenty of fat in the system" to afford it.

"In the end the NSW government's policy dilemma here is: what's in the best interests of NSW citizens?" he said. "There's a trade-off between the sale price they get and the cost consumers keep paying.''

Mr Baird has announced the 1 per cent discount will be in place until 2019, but the sale is not expected to be completed until late 2016. This means the discount would only apply for two-and-a-half years, during which prices are forecast to rise annually by less than inflation.

Mr Henley's concerns were echoed by the chief executive of the Council of Social Service of NSW, Alison Peters, who said there had been "a huge increase" in the number of people being disconnected from their electricity supply.

Ms Peters said there had been 25,900 disconnections in the first half of 2013-14. This compares with 24,888 disconnections in the whole of the previous financial year.

''For low-income households struggling to make ends meet, a 1 per cent discount in electricity will not be enough to make a difference,'' she said.

''Before selling the electricity networks, the NSW government should first ensure that low-income households can afford to stay connected to this essential service.

''The best way to assist people struggling with energy bills is to make concessions reflect the actual bill through a proportional rebate. This would see people with higher base energy needs get a higher rebate to reflect actual costs."